Correlation Between FEDEX and Zhihu

Can any of the company-specific risk be diversified away by investing in both FEDEX and Zhihu at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FEDEX and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FEDEX P 42 and Zhihu Inc ADR, you can compare the effects of market volatilities on FEDEX and Zhihu and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FEDEX with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of FEDEX and Zhihu.

Diversification Opportunities for FEDEX and Zhihu

0.13

Correlation Coefficient

FEDEX  Zhihu

Average diversification

The 3 months correlation between FEDEX and Zhihu is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding FEDEX P 42 and Zhihu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhihu Inc ADR and FEDEX is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FEDEX P 42 are associated (or correlated) with Zhihu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhihu Inc ADR has no effect on the direction of FEDEX i.e., FEDEX and Zhihu go up and down completely randomly.

Pair Corralation between FEDEX and Zhihu

Assuming the 90 days trading horizon FEDEX P 42 is expected to under-perform the Zhihu. But the bond apears to be less risky and, when comparing its historical volatility, FEDEX P 42 is 2.61 times less risky than Zhihu. The bond trades about -0.34 of its potential returns per unit of risk. The Zhihu Inc ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  359.00  in Zhihu Inc ADR on September 29, 2024 and sell it today you would earn a total of  1.00  from holding Zhihu Inc ADR or generate 0.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

FEDEX P 42  vs.  Zhihu Inc ADR

FEDEX P 42

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEDEX P 42 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FEDEX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Zhihu Inc ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhihu Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Zhihu is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FEDEX and Zhihu

The main advantage of trading using opposite FEDEX and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEDEX position performs unexpectedly, Zhihu can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Zhihu will offset losses from the drop in Zhihu's long position.

The idea behind FEDEX P 42 and Zhihu Inc ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.